Wall Street jumps as banks lead indexes to new highs

A trader works on the floor at the New York Stock Exchange after the opening bell in Lower Manhattan, New York, on May 14, 2013.

By Leah Schnurr, Reuters

Posted May 14, 2013, at 6:44 p.m.

NEW YORK — U.S. stocks rallied to fresh highs on Tuesday as investors picked up large-cap companies’ shares on the expectation that central bank stimulus will help propel the rally further.

Gains were broad, but growth sectors outperformed their peers with bank stocks leading the way. Bank of America, up 2.8 percent at $13.34, was the Dow’s biggest percentage gainer, while Citigroup Inc. rose 2.4 percent to $50.09.

Wall Street has rallied without a significant correction since the start of the year, pushing major indexes to all-time records and sending the S&P 500 up almost 16 percent for 2013 so far.

The ascent has been driven in large part by the Federal Reserve’s easy monetary policy, designed to stimulate the economy, though investors’ focus has turned to when the Fed may start to rein in its bond-purchase program.

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“The developed economies of the world are all easing aggressively, the money is looking for a home, and it’s ending up in the stock markets,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Ala.

For now, investors are betting that the central bank will be careful not to remove its support too soon in order to not disrupt the economic recovery it is trying to foster, Hellwig said.

So far, declines in the market have been met with buying and investors are trying to gauge how long that can last.

“People are indeed trying to participate in the rally, but at the same time, they’re trying to be cautious,” said Brad McMillan, chief investment officer of Commonwealth Financial, based in Waltham, Mass.

The Dow Jones industrial average gained 123.57 points, or 0.82 percent, to close at a record 15,215.25. The Standard & Poor’s 500 Index rose 16.57 points, or 1.01 percent, to end at a record 1,650.34. The Nasdaq Composite Index climbed 23.82 points, or 0.69 percent, to 3,462.61, its highest close since November 2000.

During the session, the Dow hit an all-time intraday high of 15,219.55, while the S&P 500 climbed to an all-time intraday high of 1,651.10.

The Nasdaq touched a fresh 52-week high of 3,468.67.

The market had traded sideways for the past three sessions, showing a gain of just 0.07 percent as the winding down of the quarterly earnings season and a light economic calendar have left investors without a strong catalyst for further gains.

The Dow’s gains were limited by weakness in Intel Corp., down 1 percent at $23.84, and UnitedHealth Group, off 1.1 percent at $61.73.

U.S.-listed shares of Sony Corp. jumped 9.9 percent to $20.76 after billionaire hedge fund investor Daniel Loeb called on the company to spin off its lucrative entertainment arm.

Nokia Corp. unveiled a new version of its Lumia smartphone line, but U.S.-listed shares fell 5.2 percent to $3.64. Research company Gartner said Nokia lost 5 percentage points of market share in the first quarter, falling to 14.8 percent.

Solar power companies’ shares fell after Trina Solar Ltd. estimated lower panel shipments than a previous outlook and said its results would be hurt by a foreign currency exchange loss. The stock fell 8.8 percent to $5.41, while Yingli Green Energy slid 6.3 percent to $2.36.

Most corporate earnings have been better than expected this quarter. With 90 percent of the S&P 500 companies having reported results so far, 67.2 percent have topped earnings expectations, according to Thomson Reuters data, which is even with the average over the past four quarters. However, only 46.9 percent have beaten revenue expectations, below the 52 percent average over the past four quarters.

Volume was roughly 6.2 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, just below the average daily closing volume of about 6.4 billion this year.

Advancers outnumbered decliners on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, more than two stocks rose for every one that fell.